Records raise questions about use of 'contingency fund'

Taxpayers paid some $4,000 in December 1999 to fly the Siegelman family to the Virgin Islands during the Christmas holidays, state records indicate.

Those payments and others were found during a Mobile Register review of expenditures made during the four years of the Don Siegelman administration from what's called the governor's contingency fund.

The tickets to the Virgin Islands for Don and Lori Siegelman and their two children were purchased by Siegelman aide Nick Bailey with his state-issued American Express card, according to billing records maintained by the governor's accounting office.

There is no evidence of a reimbursement.

For years, the Siegelman family spent Christmas vacations at the Virgin Islands home of Mobile lawyer and longtime Siegelman friend Jack Miller, according to an Associated Press story in 2001 that focused on state contracts awarded to Miller's Mobile-based law firm.

Siegelman, now practicing law in Montgomery, declined to comment for this story. In a written response to a Feb. 23 Register article for which he originally refused to comment, the former governor defended all of his wife's expenditures as legitimate state functions. In a follow-up interview, he declined to answer specific questions about other contingency fund expenses not related to his wife.

The contingency fund, which is controlled by the governor, was the source of payment for American Express cards issued to Bailey, Siegelman, his wife and several others, including security personnel who often traveled with the governor.

The bill containing the purchase of the airline tickets to the Virgin Islands also shows a charge of $1,006 for Bailey to fly to San Juan, Puerto Rico, also near Christmas. While in San Juan, Bailey charged about $630 in hotel and restaurant bills, the records show.

Among the other charges on Bailey's bill that month, and which the state paid:

*$90.81 for apparel at Banana Republic in Chicago.

*Three charges totaling $148.40 for clothes at the Gap in Chicago.

*$59.81 at Bloomingdale's in Chicago.

*$103.35 for purchases from a Delta Air Lines catalog.

*$43.98 to Amazon.com.

*$140.29 to a company called BNY, also in Chicago.

It may be that some or all of those charges can be explained as having a public purpose. But because the people who were assigned the credit cards often did not provide receipts and other documentation, it's frequently impossible, as with the above examples, to determine what was purchased, or why, the Register found.

The Register's review, as it applied to the American Express bills, was to a considerable degree hampered by the failure of some state officials who received cards to include records explaining their charges.

Like the Register, state auditors are having difficulty determining the nature or public purpose of many of the credit card charges, said Ron Jones, the head of the Examiners of Public Accounts. The state agency is auditing the contingency fund, as it does at the end of every administration.

The American Express bills, as well as other records reviewed by the Register, became available for inspection after Bob Riley became governor in January. The Siegelman administration had refused to provide American Express bills, and some other records, when the Montgomery Advertiser sought them a year ago.

Rip Andrews, Siegelman's spokesman at the time, told the newspaper that the credit card bills contained information that could reveal sensitive details about the state's efforts to recruit industry, and could jeopardize those efforts. He was unable to cite any exemption in the public records law that allowed the administration to withhold the records, the Advertiser reported.

The newspaper quoted Andrews' pledge that no personal expenses were charged on the credit cards.

The American Express bills - as well as separate payments made to the administration's travel agency and that the Register also focused on - don't appear to contain any information that could have jeopardized efforts to recruit automakers and other large firms to Alabama.

The bills include payments for airline tickets and hotel and restaurant bills incurred during trips by Siegelman, Bailey and others to Europe and Asia and that were related to efforts to lure companies to Alabama. While recruiting-related, many of those trips were publicized at the time by the governor's aides as they touted his efforts to bring industry and well-paying jobs to Alabama.

Many of the charges were for merchandise and travel that don't appear to have any relationship to economic development - even if such a relationship were a valid reason to withhold the records from public scrutiny.

For example, three charges on Siegelman's card, totaling $336.35, were for "Personal Power" audiotapes by motivational speaker Tony Robbins.

Dennis Bailey, a lawyer for the Alabama Press Association, said that when public officials violate the state's public records act by holding closed meetings or refusing to provide access to records, it's almost always for a somewhat innocent, if still invalid, reason, such as that they're "afraid to look stupid or get sued."

"Those are usually the reasons, but sometimes they just don't want people to know what's going on, and I'm afraid that's what this one looks like, and that's unfortunate," he said.

"This is one of the items I'm going to add to the list I keep of reasons why citizens of Alabama ought to care about access to public records," said the Montgomery-based press association attorney.

In January, the Register made a public records request for state documents related to payments to American Express from November 2001 to the end of the Siegelman administration. A story on those bills, which focused on credit card charges and travel by Lori Siegelman, was published in February.

Since then, the Register has reviewed thousands of files in the governor's accounting office that represent the entire records of the contingency fund during the Siegelman administration.

The review focused primarily on the American Express bills and payments to Worldwide Travel, a Tuscaloosa-based travel agency. In 1999, Siegelman ordered all state agencies to make their travel arrangements through Worldwide, whose owner was a friend of Siegelman and Bailey.

The files reviewed by the newspaper contained supporting records for some $3.5 million in expenditures. By no means did the paper examine every expenditure. For example, the paper didn't scrutinize the hundreds of pages of telephone bills, grocery bills for the governor's mansion, and payments for all manner of goods and services paid from the contingency fund regardless of who's governor.

As would be expected, hundreds of thousands of dollars were paid to attorneys who represented the state and the administration in a wide range of legal matters. Substantial sums were paid for other purposes that were clearly public, such as payments made to a consultant and an advertising firm to head the governor's program to collect money from so-called deadbeat dads.

Those records include receipts and descriptions of the services provided, as do records of travel expense refunds for Siegelman staff members who, unlike Bailey, didn't have American Express cards.

Siegelman's travel agent

In 1990, Bailey, a 24-year-old from Cullman, joined the first Siegelman gubernatorial campaign as a volunteer. Acting as Siegelman's driver on the campaign trail, he went on to hold various positions within state government once Siegelman gained office.

In May 2000, he became head of the Alabama Department of Economic and Community Affairs, or ADECA. The following year, in the wake of Register stories about a warehouse scandal involving that agency, the paper requested a description of Bailey's duties.

"Nick Bailey serves as budget officer, director of ADECA and confidential assistant to the governor," stated a written response. "As confidential assistant, Nick Bailey assists the governor in a range of activities throughout the day."

From his first charge in June 1999 to his final bill in August 2001 - not long before he resigned - Bailey was by far the administration's busiest credit card user.

He frequently charged airline tickets for himself, Siegelman and others, and paid hotel, restaurant and other travel-related charges in Europe, Asia, South America and throughout the United States, the bills show.

Though Bailey generally failed to provide the supporting records required for such bills, and almost never completed the forms required prior to out-of-state travel, the Register was able to use newspaper databases to determine the official purposes of some of the trips.

For example, Siegelman, Bailey and others regularly attended National Governors Association meetings, and payments for travel costs at those destinations and during those time periods were reflected on Bailey's credit card bills.

And a number of trips to Germany, France and Japan had been reported. Jim Hayes, who served in a number of positions in the Siegelman administration, including as head of the Alabama Development Office, described Bailey as a quiet, hard-working and seemingly indispensable aide to Siegelman who made virtually all of the governor's frequently hasty and hectic travel arrangements.

On at least three occasions, Siegelman flew to Germany for meetings, spent one night, and was back the following day, Hayes said. Once the governor flew to Japan on a Tuesday - a flight of about 20 hours - and was back in the office that Friday, Hayes said.

"He worked like a horse," Hayes said. "When you're traveling like that, arrangements are difficult. The governor wants to be back, and be back in a hurry. Nick was critical in that. We couldn't have lived without Nick. Don was very demanding on things like that."

Bailey was in demand 24 hours a day, Hayes said. He was so close to the first family that he frequently vacationed with them, said Hayes, now head of the Economic Development Partnership of Alabama.

In June 1999, Bailey used his card to pay for travel-related bills in Vermont, Point Clear, Minnesota, Germany and France.

In a one-month period starting on Dec. 3, 1999, he paid for meals, hotel rooms and other charges in New York, Atlanta, Chicago, Montgomery, Washington, D.C., Puerto Rico, Tokyo and Miami Beach.

In some cases, it appears that others made charges on Bailey's state credit card. For example, on Nov. 18, 2000, Bailey's card was used to pay a $13 bill at the Shop'N'Snack in Birmingham, and to pay a $1,615.09 hotel bill in Caracas, Venezuela.

One bill included about $2,100 in restaurant and hotel bills in New York City over a three-day period in December 2000. Next to those charges Bailey, or someone, put the initials "PH." That could indicate that the charges were incurred by Paul Hamrick, who at the time was Siegelman's chief of staff.

Bailey's early bills showed that the state paid for purchases, such as from the Gap, that suggest a personal expense. Records and notations on the later bills, while also reflecting charges for clothes, music and other such items, show that he added notations on the bills indicating that certain charges were personal.

The state paid for the remaining charges, while Bailey, apparently, paid American Express separately.

In many instances, however, there's no way to tell whether a charge was state business or personal business. For example, sometimes the state paid Bailey's monthly charge for the Internet service provider Mindspring, and sometimes he marked the charge as personal. One month's bill for $430 was paid by the state, though there are no records reflecting the reason for the higher charge.

Siegelmans on the road

As a rule, Siegelman kept the locations of his vacations a secret, with only one or two staff members knowing where he was, said Hayes.

"Lori is a very private person, and I respected that," said the former Siegelman Cabinet member. "When they went on family vacations, she wanted it to be private."

The first family favored locations that provided opportunities for activities outdoors, Hayes said. And Siegelman, he noted, almost always went to annual midsummer meetings of the Conference of Western Attorneys General.

That's an affiliation of the attorneys general of 18 Western states and territories. Siegelman participated in panels and discussions, he and his spokesmen have said when explaining why he attended.

The contingency fund records indicate that Siegelman and his wife attended the 2000 meeting in Custer, S.D., the 2001 conference in Sun Valley, Idaho, and the meeting last summer in Monterey, Calif. Travel agency records indicate their children went, too, but show that the state didn't pay for their flights.

News stories at the time reflect that the Siegelmans had their summer vacations following those conferences.

In March 2000, the Siegelman family went to Europe for spring vacation, and the governor also held economic development meetings, according to news reports. Bailey's credit card shows hotel and restaurant bills in Rome, Turin, Lonato and Venice, the longest stop on the trip, the records indicate.

In November 2000, the state paid about $1,400 for travel, lodging and expenses for a state security officer to accompany the governor's teenage daughter on a trip to North Dakota. There are no records indicating the purpose of the trip.

Most of the first lady's charges were for out-of-state travel and merchandise, such as from Books-A-Million. Most of her trips stemmed from her involvement in the arts, Siegelman told the Register after it reported her visits to Canada, Milwaukee, Boston, California and other destinations.

Descriptions on forms attached to some bills from travel agencies reflect arts-related purposes for trips to Palm Beach, Fla., two to New York City, another to Chicago and several to California.

(Editor's note: Since August 2001, Siegelman has maintained a stated policy of refusing to comment to Register Reporter Eddie Curran.)